Lightbridge Flirts with Areva

by Debra Fiakas CFA

Last week nuclear fuel developer Lightbridge
Corporation (LTBR:
Nasdaq) announced an agreement with nuclear power plant builder Areva
(AREVA: Paris; ARVCF:
OTC/QB) to form a joint venture. The present pact is a
precursor to a formal joint venture agreement that would team up the
two companies - one very large multinational nuclear
power house and one still quite small fuel developer -
in joint development of Lightbridge’s metallic nuclear fuel
technology.

Lightbridge has developed and patented a novel design that replaces
conventional tubes filled with ceramic uranium pellets now used by
pressurized water reactors. Lightbridge’s fuel rods are also
produced differently. A co-extrusion technology is used to
shape a single piece of solid fuel rod from a metallic matrix
composed of a uranium and zirconium alloy.

The Lightbridge fuel rod affords a number of advantages. Most
important for nuclear power plant operators is the potential for a
10% to 17% increase in power generating capacity from existing
reactors. For new reactors the “power uprate” as Lightbridge
calls it, could be as high as 30%. The Lightbridge all-metal
fuel rods could also extend the operating cycle length from 18
months to 24 months. These benefits mean a dramatic change for
the better in the economics of nuclear power plants, making both
existing and new plants more attractive alternatives to fossil fuel
plants that spew out offending carbon pollution.

Some reactor system adjustments would be required to use
Lightbridge’s all-metal fuel rods. That means the company
needs to work closely with nuclear plant designers and fuel
suppliers to fully commercialize the Lightbridge fuel rod
design. Ultimately it will be the nuclear fuel suppliers that
will be Lightbridge’s customers. In a
post on September 11, 2015, discussing the
U.S. Clean Power Plan and nuclear power, we noted that Westinghouse or Areva
could be two of Lightbridge’s most likely commercial partners.

True enough the agreement that was just announced is not much more
than a firm handshake on a plan to meet again. However, it is
not likely that Areva would even bother with Lightbridge if they had
no interest in Lightbridge’s novel nuclear fuel rod design. In
my view, with this announcement Lightbridge has become an even more
interesting play in nuclear power through the possible endorsement
by Areva.
Debra Fiakas is the Managing Director of Crystal Equity
Research, an alternative
research resource on small capitalization companies in selected
industries.

Neither the author of the Small Cap
Strategist web log,
Crystal Equity Research nor its affiliates have a beneficial
interest in the companies mentioned herein.